Definition
A subpoena is a legal order to produce documents or testimony. A records request can come from a regulator, a successor auditor, a lender or a client. The AICPA Confidential Client Information Rule (ET 1.700.001) allows a member to disclose information to comply with a validly issued and enforceable subpoena or summons. Section 7216 separately restricts use and disclosure of tax return information. When the IRS makes a proper and lawful request, Circular 230 section 10.20 requires a practitioner to submit the records promptly unless the practitioner has a good-faith belief on reasonable grounds that they are privileged. Section 7525 gives a limited privilege for tax advice, only in noncriminal tax matters before the IRS or in noncriminal federal court tax proceedings.
Why it matters in an audit or review
Firms hold sensitive records. A hasty release can breach confidentiality, and an ignored request can create penalties. Firms need a procedure that routes requests to a responsible partner and counsel.
Example
Illustrative: a firm receives a subpoena for a former audit client's workpapers. It logs the date, sends the document to counsel, checks validity and scope, notifies the client where permitted, and produces only what the order covers.
Common mistakes
- Handing over a whole file when the subpoena asks for part of it.
- Assuming the section 7525 privilege covers audit work or criminal matters.
Sources
- AICPA, Code of Professional Conduct, ET 1.700.001: https://pub.aicpa.org/codeofconduct/ethics.aspx
- Internal Revenue Code sections 7216 and 7525: https://www.law.cornell.edu/uscode/text/26/7525
- Treasury Department Circular No. 230, 31 CFR 10.20: https://www.law.cornell.edu/cfr/text/31/10.20
Definitions paraphrase AICPA and FASB guidance; read the standard itself before relying on a requirement. Example figures are illustrative. This page is guidance, not professional advice. Report an error